Shares of frontline tyre stocks like MRF, Ceat, Goodyear India and Balkrishna Industries were trading at their new highs after the natural rubber prices hit six-month low.
At 02:37 pm, Balkrishna Industries (up 8% at Rs 1,180) and Goodyear India (up 7.2% at Rs 779) were up more than 7% each, while MRF, Apollo Tyres, Ceat, JK Tyre & Industries and TVS Srichakra up between 1% and 4% on the BSE. The S&P BSE Sensex was down 0.19% at 28,282 points.
On Tuesday, spot price of rubber in Kochi closed at Rs 11,583.30 per quintal on NCDEX, its lowest level since March 31, 2016.
The rubber prices declined 9% in past one-month and 20% from its recent high of Rs 14,450 on August 2, 2016.
All these stocks have outperformed the market by surging upto 49% in past one-month on expectation of a lower nature rubber prices could improve the profit margin of tyre companies.
Considering the drop in natural rubber prices, price hike/stable price in tyre replacement market, pricing discipline in the industry and improving financials, analysts are turning positive on the sector.
Going forward, analyst expects the domestic tyre demand to improve on improvement in OEM demand and supported by replacement demand on improvement in economical activity.
Price in Rs % return Company LTP 1 day 1 month Balkrishna Inds 1180.00 7.82 39.94 Goodyear India 778.50 7.23 34.47 MRF 53600.00 4.80 38.05 Apollo Tyres 229.90 4.31 18.29 JK Tyre & Indust 158.35 2.13 8.87 CEAT 1398.65 2.07 46.66 TVS Srichakra 3931.00 1.69 48.61 Sensex 28282.00 -0.19 -0.87 LTP : Last traded price on BSE at 02:37 pm